April 9, 2014

Defendant forfeited challenge to $1.2 million punitive damages award by refusing to produce witness on financial condition (Smally v. Nationwide)

In this insurance bad faith case, a jury awarded $686,000 in compensatory damages and $1.2 million in punitive damages to one of the plaintiffs.  (A second plaintiff also recovered compensatory damages, but no punitive damages).

On appeal, the insurer argued that the punitive damages should be vacated because the plaintiff failed to meet its burden of presenting meaningful evidence of the defendant's financial condition.  California courts frequently strike down punitive damages awards on that basis, but not this time.

The Court of Appeal (First Appellate District, Division Four) held in an unpublished opinion that the defendant forfeited its right to complain about the absence of financial condition because the defendant refused to produce a witness on that issue.  The court noted that the plaintiff asked the defendant to produce a witness knowledgeable about the defendant's financial condition, and the defendant did not object to that request.  By neither objecting to nor complying with the request, the defendant forfeited its right to complain about the lack of evidence of its financial condition.